[Solved] Fictitious Assets in Balance Sheet Example

Welcome back to our blog, in today's post, we will discuss fictitious assets and we will also add an example of fictitious assets in the balance sheet, so if you are exploring accounting then you should read this post till the end. 

What Are Fictitious Assets?

 

These assets are non-physical assets that appear on a company's balance sheet but do not have any solid/tangible value.

Fictitious Assets in Balance Sheet

Fictitious Assets List

Now let's check out the fictitious assets list:

• Deferred Revenue
• Accumulated Amortization
• Prepaid Expenses
• Goodwill
• Promotional Expenses
• Long-term Deferred Charges
• Unrealized Gains/Losses

examples of fictitious assets

Now before we solve our example let me tell you examples of fictitious assets.

• Preliminary Expenses: Costs incurred during the setup of a company, such as incorporation fees, legal expenses, etc. 

• Goodwill: This arises when a company pays more for an acquisition than the fair value of the net assets acquired.

Now you know all the basic information let's solve our example:

Fictitious Assets in the Balance Sheet

Assets		Liabilities and Equity
Current Assets:		Current Liabilities:
Cash and Cash Equivalents	50K	Accounts Payable	30K
Accounts Receivable	40K	Deferred Revenue	25K
Inventory	60K	Short-term Debt	20K
Other Current Assets	20K	Other Current Liabilities	15K
Total Current Assets	170K	Total Current Liabilities	90K
Non-Current Assets:		Long-term Debt
Property, Plant, and Equipment	200K	Long-term Loans	100K
Intangible Assets	30K	Other Long-term Liabilities	50K
Other Non-Current Assets	40K	Shareholder's Equity
Total Non-Current Assets	270K	Common Stock	150K
Total Assets	440K	Retained Earnings	200K
		Total Liabilities & Equity	440K

In this given balance sheet The 25,000 that comes under "Deferred Revenue" in the current liabilities section is a fictitious asset. 

Conclsuion

Here in this post, we add all the related information about fictitious assets and an example to understand how to use fictitious assets in the balance sheet.